Monday 6th October: Weekly technical outlook and review.

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Labor Day – Australia.

Bank Holiday – China.

EUR/USD:

Weekly Timeframe: The Euro continues to devalue against the U.S Dollar, as prices closed the week below a major weekly demand area (1.26591-1.28010) at 1.25122. This move could very likely encourage further selling down to a combined weekly demand/Quasimodo support area at 1.22403-1.24420/1.22866 which may be seen sometime this week.

Daily Timeframe: The daily timeframe shows that the 1.26837 level was too strong for the buyers to overcome, and as a result, price sold off sharply. This move was evidently fueled by the positive NFP numbers announced on Friday. A ‘clean’ close below the 1.25618 daily decision-point level was also seen, which could likely attract follow-through selling down to a nice-looking daily support flip level at 1.24422. With that being said though, before this area gets hit, there is a strong possibility that price could retest the 1.25618 level (as resistance), so do be prepared for this to happen early on in the week.

4hr Timeframe: For any trader who got in short at the small 4hr supply area coming in at 1.27012-1.26806, great job, the risk/reward on that trade is fantastic!

The market closed the week (1.25122) very deep within a combined 4hr demand/round number area at 1.25005-1.25362/1.25 (active buy orders seen coming in at 1.25025). This area remains a very important one, so much so that if price breaks below here, a drop could ensue all the way down to a 4hr resistance flip level at 1.24408, simply because demand/buying opposition to the far left has very likely already been consumed.

Be that as it may, before a break below is seen, a rally higher to retest the 1.25760 resistance flip level may happen (which nicely lines up with the daily decision-point level at 1.25618), where we expect active sellers to come into the market around the 1.25690 level.

Buy/sell levels:

Buy orders: 1.25025 (Predicative stop-loss orders seen at: 1.24786).

Sell orders: 1.25690 (Predicative stop-loss orders seen at: 1.26033).

GBP/USD:

Weekly Timeframe: Just like the Euro, the British pound also devalued against the U.S Dollar last week, and as a result saw prices closing relatively deep within a beautiful-looking weekly demand area seen at 1.58533-1.60157, so as per this timeframe we’re expecting higher prices to be seen this week.

Daily Timeframe: Friday’s trading action saw price smash through the daily demand area seen at 1.60507-1.61044. This move was very likely helped along its way by the positive NFP numbers. The path south now looks relatively clear to hit an area of clear daily support coming in at 1.58992, which sits very deep within the weekly demand area mentioned above at 1.58533-1.60157. However, with the break south being so strong, it is very likely there were unfilled sell orders left along the way which one could possibly take a short-term trade from, let’s take a look at the 4hr timeframe to see what we can find.

4hr Timeframe: The 4hr timeframe shows that during the NFP selling, the huge number 1.6 was broken south. With that being the case, the path south now looks relatively clear all the way down to an area of 4hr demand coming in at 1.58533-1.58915 (active buy orders likely set just above at 1.58988) , which is seen deep within weekly demand at 1.58533-1.60157, and also around a distinguishable daily support level coming in at 1.58992.

However, we feel the aforementioned 4hr demand area will not be hit until more unfilled sell orders have been collected. The first area of interest would obviously be the 1.6 level since it very likely took a lot of selling pressure to break this level, and thus we expect active unfilled sell orders to be set just below around the 1.59949 level. Failing that, we highly expect there to be active sellers waiting around the 1.60600 level, since this area (1.60832-1.60637 – seen clearer on the hourly chart) was very likely where the initial decision was made to break below the daily demand area at 1.60507-1.61044.

Weekly Timeframe: The weekly timeframe shows that price spiked below the weekly demand area coming in at 0.86591-0.88247. However the question we all need to be asking is, was this spike to clear the buyers out to continue south, or was it merely a push lower to accumulate liquidity (fakeout) for a move higher? It will be interesting to see what the lower timeframes have to say.

Daily Timeframe: Friday’s trading action saw price dropping deep into a fantastic-looking daily demand area at 0.86183-0.87183. There’s a little concern over this area of demand, since it is not fresh. A deep touch was seen on the 24/01/14 at 0.86591 indicating this area may have been weakened. Nonetheless, price is still trading in a daily demand area and higher prices could very well be seen, which could effectively mean the spike below weekly demand (0.86591-0.88247) may have been a fakeout into the aforementioned daily demand area, and until this area of demand is consumed, this is exactly what it remains to be.

4hr Timeframe: The 4hr timeframe shows that on Thursday price pushed above, and consumed the combined 4hr supply/round number area seen at 0.88122-0.87511/0.88 (marked with a blue arrow [0.88258]). We feel this may have been a signal for higher prices to come, as there is very likely no selling opposition seen now until the next 4hr supply area coming in at 0.88961-0.88629 (active sell orders likely set just below at 0.88574).

With that being said, late on Friday, the market spiked below a 4hr support level/minor low at 0.86591/0.86622 indicating a fakeout could be process. In our humble opinion, no buying should be considered until the 0.87 level just above has been consumed, as there is very likely active sell orders just below there at 0.86970.

Weekly Timeframe: The weekly timeframe shows that price closed the trading week within a major weekly supply area (110.652-108.123) at 109.721. At the time of writing there appears to be very little selling interest seen within this supply area, let’s see what the lower timeframes can tell us.

Daily Timeframe: Friday was clearly a bullish day for this pair, which was very likely fuelled by a positive NFP result. Assuming follow-through buying is seen this week, it is very likely price will hit the daily Quasimodo resistance level coming in at 110.390 (located deep within weekly supply [110.652-108.123]). This level in our opinion is the last ‘barrier’ if you will, to stop prices from trading above the weekly supply area just mentioned.

4hr Timeframe: At the time of writing, price action is seen trading around a combined 4hr supply/round number area at 110.081-109.712/110. Due to the momentum initially seen out of this area, we highly expect a bounce at the very least to be seen. Assuming active selling is seen here early this week, the first take-profit target for us would be set around the 109 level, since this area was aggressively consumed indicating there may be unfilled buy orders left, just above the109.059 area.

We agree the daily timeframe is showing room to the upside, that is true, but we cannot ignore the fact that price is trading within a major weekly supply area (110.652-108.123) at the moment, and thus a move to the downside could be seen at any time!

Buy/sell levels:

Buy orders: 109.059 (Predicative stop-loss orders seen at: 108.819).

Sell orders: N/A (Predicative stop-loss orders seen at: N/A).

EUR/GBP:

Weekly Timeframe: The weekly timeframe shows price is currently trading within a monster weekly demand area at 0.76931-0.78623, with price closing the week relatively bullish at 0.78309.

Daily Timeframe: Last week showed there was clear buying interest around the daily demand area at 0.77507-0.77772. Be that as it may, the only way in our opinion to find out if this buying was legit, and not just traders liquidating their short positions, would be to a see price close above the 0.78729 level, and as a result this would likely also confirm buying strength from the weekly demand area mentioned above at 0.76931-0.78623.

4hr Timeframe: Buy orders (0.78221) have already been filled around the 4hr resistance flip level at 0.78195. Assuming that the buyers can overcome any selling pressure that may reside around the 0.78439 level (marked in pink), the path north is then very likely clear up to at least the 4hr Quasimodo resistance level seen at 0.78777 (lines up beautifully with the daily support flip level at 0.78729), where we believe there to be active sellers waiting just below at 0.78754.

However, In the event that a break below the 0.78195 level is seen, we can very likely expect price to hit a combined 4hr decision-point/round number area at 0.77891-0.77982/0.78, where buy orders are likely set just above at 0.78026).

Buy/sell levels:

Buy orders: 0.78026 (Predicative stop-loss orders seen at: 0.77865).

Sell orders: 0.78754 (Predicative stop-loss orders seen at: 0.78909).

USD/CAD:

Weekly Timeframe: The USD/CAD pair has closed the week just above a weekly Quasimodo resistance level (1.12231) at 1.12415. Could this mean higher prices are going to be seen this week?

Daily Timeframe: Thursday’s trading action shows price reacted beautifully off of a daily decision-point area at 1.10521-1.10826, while on Friday, fueled by the positive NFP numbers, price was pushed deep into a daily supply area seen at 1.12775-1.12361. Assuming selling interest comes into the market here, we can, at the very least expect price to drop down to the aforementioned daily decision-point area. However, if a break above here is seen, things would get very interesting indeed, since the next area of fresh daily supply comes in at 1.17225-1.15458 (take a look to the left of current price above this daily supply area, the path is clear, it’s almost smooth).

4hr Timeframe: Late on Friday saw a bearish reaction just below a 4hr Quasimodo resistance level at 1.12704, which consequently forced price down to a small 4hr decision-point area seen at 1.12226-1.12430. If a bullish reaction is seen from here early on in the week, this could be the end of the road for the traders who faded the daily supply area mentioned above at 1.12775-1.12361, and as a result, much higher prices are then expected to follow.

On the other hand, a break below this small 4hr decision-point area could very well be the first signs of a bearish reversal beginning to form, which would at the very least see prices likely dropping down to fill active buy orders lurking just above the 1.12 level at 1.12045.

Buy/sell levels:

Buy orders: 1.12045 (Predicative stop-loss orders seen at: 1.11750).

Sell orders: N/A (Predicative stop-loss orders seen at: N/A).

USD/CHF:

Weekly Timeframe: A full-bodied bullish candle formed last week resulting in price trading relatively deep within a weekly supply area seen at 0.98378-0.95895. As per this timeframe, we are naturally expecting lower prices to be seen this week.

Daily Timeframe: Friday’s trading action saw the buyers aggressively push prices into a daily supply area coming in at 0.97505-0.96339 (located within weekly supply at 0.98378-0.95895). In the event that selling interest comes into the market here, we can very likely see prices trading down towards at least the daily decision-point area at 0.95163-0.95581.

4hr Timeframe: Friday’s trading action saw prices hit an area of 4hr stacked supply (0.97505-0.97153/0.97152-0.96744). Regarding stacked supply areas, in our experience we have seen price trade to the ‘extreme’ areas more often than not. In this case the extreme area would be the higher of the two supply areas at 0.97505-0.97153. With that being said, before lower prices are seen, we feel price will likely rally a little further early this week possibly filling active sell orders around the 0.97106 level before lower prices are seen this week.

Also, any traders considering shorting the 0.97 level may want to take into account the aforementioned stacked supply area for stop-loss purposes, since a deep test of the round-number level will very likely be seen.

Buy/sell levels:

Buy orders: N/A (Predicative stop-loss orders seen at: N/A).

Sell orders: 0.97106 (Predicative stop-loss orders seen at: 0.97592).

XAU/USD (GOLD)

Weekly Timeframe: The weekly timeframe shows price has now entered a long-term weekly demand area seen at 1156.70-1194.45. According to the weekly candle the sellers had taken overall control last week as price closed the week at new lows (1190.85). Our first thought, from looking only at the weekly timeframe is to go long, however let’s see what the lower timeframes have to say first.

Daily Timeframe: Friday’s trading action saw a full-bodied bearish candle form. This – like so many of the USD related pairs was very likely fuelled by the positive NFP numbers. With this in mind, price is now seen trading very close to a daily Quasimodo support level at 1186.83. Traders considering going long around this level may benefit from keeping in mind that a major daily support level lurks just below at 1182.01, and as such we should all be prepared for a possible fakeout.

4hr Timeframe: The 4hr timeframe shows that the 4hr supply flip area (1208.18-1204.31) was consumed on Friday, which subsequently saw prices drop like a rock nearly hitting an ‘extreme’ 4hr demand area seen at 1178.86-1188.16. Why is this area extreme? Take a look to the left of current price, this area of demand represents the origin of a huge rally that begun on the 31/12/13 at 1178.86, and for this reason likely indicates active unfilled buy orders are lurking just above, around the 1189.24 area.

Assuming a small decline in value does indeed materialize, and fills these unfilled buy orders just above the aforementioned 4hr demand area, we are confident higher prices will follow.

Supporting factors for a long trade:

Price is currently trading within weekly demand at 1156.70-1194.45.

The daily timeframe shows a highly confluent buy zone coming in at 1186.83/1182.01 (Quasimodo support level)/daily support level).

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